The sale of film studio DreamWorks Animation to toymaker Hasbro has been abandoned after an anonymous letter outlining the discussions around the deal and problems with DreamWorks Animation’s business was mailed to several media outlets. It is the second such failed merger for the studio in as many months, after a $3.4 billion deal to sell to Japan’s SoftBank fell through in late September.
According to the Hollywood Reporter, the anonymous letter was highly detailed and apparently written with the intention of derailing the merger. The letter reportedly not only outlined discussions between DreamWorks Animation and Hasbro, but also detailed DreamWorks Animation’s effort to sell a 25% stake in AwesomenessTV to Hearst Corp. for $81.3 million.
Additionally, the letter raised doubts about DreamWorks Animation’s upcoming film release schedule. The company’s big holiday movie for 2015, Kung Fu Panda 3, is currently set to open on December 23, just days after Disney releases the surefire blockbuster Star Wars Episode VII: The Force Awakens. Another DreamWorks Animation film, B.O.O.: The Bureau of Otherworldly Operations, was reportedly moved out of its summer, 2015 release window – at least partially due to creative concerns.
The letter also alerted Disney to the merger talks, and a source close to the company told The Hollywood Reporter that executives there had a “nuclear-level reaction” when they learned of the discussions. According to the report, toy deals with Disney constitute around a third of Hasbro’s entire business, including toy contracts for Marvel and Star Wars properties, as well as last year’s megahit Frozen. Disney executives reportedly told Hasbro CEO Brian Goldner that they would view the toy manufacturer as a competitor should they acquire DreamWorks Animation.
DreamWorks Animation has had a number of high-profile flops recently, including the films Mr. Peabody & Sherman and Turbo, but have fared well in the past with films like How To Train Your Dragon, Shrek, and Madagascar. How To Train Your Dragon 2, released this year, has pulled in $618.8 million in global box office receipts to date.
“The problem is, at the end of the day, it’s a movie studio,” BTIG analyst Rich Greenfield told the Hollywood Reporter, saying he is not optimistic that DreamWorks Animation will get a deal at the price it wants. “Not everybody gets a Hollywood ending.”
One unnamed industry executive told the publication that with two failed deals in as many months, DreamWorks Animation has become “the girl nobody wants to date.”
Steve Birenberg, president of Northlake Capital Management, told the magazine that the public nature of the negotiations conducted by CEO Jeffrey Katzenberg has hurt the company from a public relations standpoint.
“Repeated efforts to sell reflect poorly on DreamWorks Animation and especially on Katzenberg,” Birenberg said.
DreamWorks Animation’s stock is reportedly down 37 percent this year, and fell an alarming 14 percent on November 17, when news of the merger talks with Hasbro leaked.
DreamWorks Animation CEO, Jeffrey Katzenberg, has not had an easy few weeks: In addition to the leaked reports of his company’s merger talks, the political candidate he heavily supported in this year’s election, Kentucky Democratic Senate candidate Alison Lundergan Grimes, lost by a large margin to Republican incumbent Mitch McConnell.